Math, anyone?

Sometimes it is tiresome to read reports and what journalists print about them. The reports are seldom that wrong. Sure many banks are cooking their books and the massive credit expansion have bellied up stock markets (that will crash sooner or later), but one can still read whatever information that is there, which, of course, none from the enemy class is doing – or worse; they do and try to sell us their crap anyway which is the notion I hold true more and more.

A recent report about France and Germany’s GDP is no different. Our enemies say those two countries have growing GDP hence the recession is clearly over. Is it now?

Before I quote that report, this is how GDP is normally counted:

GDP = private consumption + gross investment + government spending + (exports − imports), or,
GDP = C + I + G + (X − M).

In this little show-and-tell about how our enemies “work” I want you all to take notice on a couple of things in this equation. Firstly exports VS imports or X-M. In the world of basic math it means that if exports grow in relation to imports GDP increases. If imports grow, GDP goes down. The same happens if either goes down in relation to the other. Okay? With me? This is very basic math that you should be able to figure this out at middle school – which, of course, means that economist, journalists and some other idiots cannot manage it.

Now, let us look at the report

Firstly France had 0,2% in change compared with the previous quarter, however, compared with the same period last year it contracted with -2,6. Germany went up 0.3%, but compared with last year -5.3%. Good news? Maybe in bizzaro world. According to all institutes (none of which are quoted by any of our enemies) that handles recession statistics it is not unusual for a couple of months of dip and then a surplus like back in 2001 when the US show 2Q of negative growth, 1Q plus and then 1Q negative again. Even during the Great Depression (soon to be called; “The tiny one”) there was several signs of economic comeback, some countries even show Q-plusses on one or two occasions.

But lets ignore that for a moment, one can argue about those numbers so we can leave them be and instead look at the actual counted GDP numbers.

In France, economy minister Christine Lagarde said: “Foreign trade contributed 0.9% to the GDP figure”. Really? How interesting. How about imports? Lord and behold, imports have gone down… Nooooo… And what does that do to GDP? If you do not remember; go to the top and read from the beginning again. And what really went on in Germany? Well, according to Statistisches Bundesamt the increase in GDP is mainly due to following: “As price-adjusted imports declined far more sharply than exports, the balance of exports and imports also had a positive effect on GDP growth.” Noooo… really? So when Unicredit economist Andreas Rees reckons that the export-dependent auto sector contributed 0.25 percentage point to overall German GDP growth, you shouldn’t really be surprised. In other words: both countries have “stimulated” their auto-industry with countless billions which have made people go and purchase cars they otherwise would not buy (hence increased private consumption, look above again…), which makes one part of the GDP-“increase”, the other increase is that people do not shop foreign goods as much in correlation to what they sell abroad. Already these two factors mean that the entire "growth" disappears. The last piece of the puzzle is that both countries have committed billions of tax money on different projects, again with the notion of “stimulating”. And what you really want to know here, looking at the equation again, is that if government spending goes up €100 billion it will show up as a €100 plus in GDP (if all else stay the same).

So, is this all bad? No, not really. France and Germany have not been throwing as much money into the fire as UK or the US, German economists are also a tad smarter than many others since they have an history of knowing what happens when you print a lot of money out of thin air. It is very possible that we during the 3Q also will see plus in GDP, however, imagine what happens when the government founding for different projects run out, when the incentive to buy cars dissipate or if the rest of the European countries (that are the main trading partners to France and Germany) do not get their economies going. If all of this happens, or even just some of it, the GDP numbers will fall again.

All of this, however, is not really the main problem. As you now know GDP numbers can be tampered with or journalists can just chose to show us what they feel is appropriate, but so can also a lot of other statistics. For instance, Ben Bernanke sat before a hearing the other day and claimed that the Fed would not monetarize US debt. Under oath he said that this would not be done, but back at the office he immediately started pressing those funny buttons and presto, another $200+ billion was thrown into the American economy. I have seen/read some people claiming this to be perjury, and it is hard to argue with that. Worst still is US unemployment numbers that officially is 9,4%, but the way they are counting is ridiculous to say the least. And where have all those trillions upon trillions of dollars and Euros, and pounds and yen gone? Mainly they have gone straight to financial institutes that have either put them in the vault or to, tada! Bought equities! And where is that main “green shoot” our enemies are seeing? That’s right, the stock-markets. So all that fictive monopoly money they have conjured up from nothing has inflated certain areas of the economy, it's not additional value, only more fiat money, and this is what really should worry you. In addition we can mention oil prices or the comming collapse of the dollar, or the massive malinvestments or any other stupidity our enemies have created for us.

The truest signs of how the economy is going you can find in other places. As I have mentioned before, prostitution is going down. An supposedly recession proof industry like the sex-trade is falling. From the US we can see that the only good sign within retail is a big increase in alcohol purchases. Similar numbers are shown from Sweden. People's instincts is telling them to stock up on vodka and such. Piracy is going up around the globe and the Baltic trading index is falling again. These signs are real indications.

To end off this little rambling session I can tell you I have been inspected lamp-posts recently. Although hardly tall enough in UK cities, I have noticed that along side the motorway there are some steady tall ones that can be properly attired with hardy ropes in the future. I suggest you go on a similar excursion and pick out a nice spot for future dangling...